Interim Occupancy Agreement — Receipt for Rent and Security Deposit — RPI Form 271

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This form is used by a buyer’s agent when the buyer seeks occupancy of the property before closing escrow, to prepare a rental agreement for buyer occupancy with conditions protecting the seller if the buyer defaults.

Your use of RPI Form 271

Occupancy agreements

The 2020-2021 surge in home prices boosted California homeowners’ home equity levels. Before prices are fully dragged down from their May 2022 peak by the encore of the 2020 recession, owners may take advantage of this fleeting equity boost by selling their primary residence and buying replacement property.

However, it’s not always possible to smoothly transition from the old residence to the new one. In this volatile environment where prices are looking for a bottom, it’s a greater challenge to time the current home’s closing with the purchase of a replacement home.

This logistical challenge has a solution: occupancy agreements.

An occupancy agreement creates a rental agreement for the buyer or seller to occupy the property as tenants until their replacement residence is secured. [See RPI Form 271 and Form 272]

A buyer’s agent uses the Interim Occupancy Agreement when the buyer seeks occupancy of the property before closing escrow. [See RPI Form 271]

A seller’s agent uses the Holdover Occupancy Agreement when the seller seeks to temporarily remain in possession of the property after the sales escrow closes. [See RPI Form 272]

Occupancy agreements are best attached to the purchase agreement as an addendum. They may also be agreed to prior to closing escrow or in a counteroffer. The agreement clarifies the buyer or seller’s ownership rights and, more importantly, creates a landlord-tenant relationship for quick resolution of any disputes over occupancy in the event of a default.

The interim occupancy agreement

Under an interim occupancy agreement, arrangements are made for the buyer to prematurely take possession of the replacement property prior to closing the purchase escrow on the replacement home. [See RPI Form 271]

To create the tenancy:

the seller, as a landlord, agrees to lease the premises for a certain term; and
the buyer, as a tenant, agrees to pay rent for the use of the premises.

The occupancy agreement provides for the rental period to be set as a determinable “fixed” time period. It will expire on the earlier of the close of escrow or on termination of the underlying agreement. [See RPI Form 271 §3]

A fixed-term tenancy terminates automatically without need of prior notice from the seller/landlord. [Camp v. Matich (1948) 87 CA2d 660]

In addition, the amount of rent and time of payment is stated. [See RPI Form 271 §5]

A special provision is included in the occupancy agreement for payment of rent when the buyer does not vacate upon the expiration of the tenancy. The amount is sharply increased and made payable at a daily rate to discourage the buyer from remaining in the premises beyond the agreed-to term of occupancy. [See RPI Form 271 §5.7]

Further, the security deposit is to be refunded to the buyer on the close of escrow. On cancellation of the purchase agreement, the tenancy terminates and the security deposit is to be returned within 21 days of the buyer vacating, less amounts necessary to remedy any default in rent or to clean or repair the premises. [See RPI Form 271 §6]

Analyzing the interim agreement

A buyer’s agent uses the Interim Occupancy Agreement — Receipt for Rent and Security Deposit published by Realty Publications, Inc. (RPI) when the buyer seeks occupancy of the property prior to the close of escrow to purchase the property. The agreement allows the agent to prepare a rental agreement for buyer occupancy with conditions protecting the seller when the buyer defaults. [See RPI Form 271]

The Interim Occupancy Agreement contains:

Facts, such as:
- the referenced agreement (Purchase agreement, Counteroffer, Escrow);
- the date;
- the buyer’s/tenant’s identity;
- the seller’s/landlord’s identity; and
- the address [See RPI Form 271 §1];
Agreements, including:
- the buyer has a right to possession and occupancy [See RPI Form 271 §2];
- the date the occupancy commences and when it expires [See RPI Form 271 §3];
- cancellation agreements, including when the seller may terminate the agreement [See RPI Form 271 §4];
Rent information, including:
- the amount of rent and security deposit the seller is to receive [See RPI Form 271 §5];
- the time and method of payment [See RPI Form 271 §§5.1 through 5.5];
- the rent will be prorated to the date the tenancy is terminated [See RPI Form 271 §5.6]; and
- the amount the buyer/tenant will pay per day when they holdover [See RPI Form 271 §5.7];
Security deposit information [See RPI Form 271 §6];
Property conditions, detailing that the property is in satisfactory condition and will remain that way during the buyer’s tenancy [See RPI Form 271 §7; see RPI Form 560];
the buyer is to timely pay utilities incurred during their occupancy [See RPI Form 271 §8];
a hold harmless provision [See RPI Form 271 §9];
the seller/landlord’s right to enter the property in case of an emergency or for necessary repairs [See RPI Form 271 §10];
the buyer is not to assign their rights or sublet any portion of the premises [See RPI Form 271 §11];
an attorney fees provision [See RPI Form 271 §12];
additional terms to be attached in an addendum [See RPI Form 271 §13; See RPI Form 250]; and
Signatures of the buyer/tenant and seller/landlord. [See RPI Form 271]